Finance Ministry To bring Budget :Preparation Guidelines for Local Units

The Ministry of Finance (MoF) is formulating budget preparationguidelines for the local units.

According to the Intergovernmental Fiscal ManagementDivision of the MoF, local units would have to seek resources and allocatebudget for the programmes as per the guidelines set by the central government.

As per the preliminary draft of the guidelines, local unitswould have to present estimates of expenditure for next three fiscals.Similarly, local units would be directed to present a plan of mid-term reviewof the budget while presenting annual budget.

Local units can estimate their annual budget on the basisof grant from central and provincial governments, revenue collected by them andloan that can be provide by the central government.

“Local units would have to follow some basic criteria whilepreparing their annual budget. MoF will facilitate them through theguidelines,” Nirmalhari Adhikari, chief of the division, said. Ministry ofFederal Affairs and Local Development had set the guidelines for preparing thebudget for this fiscal year.

Now, the local units would have to prepare their budget asper the priority of central government and follow the participatory approachwhile preparing the budget.

“Local units would also have to submit their plans forutilising the local resources while seeking budget. This would help strengthentheir capacity as well,” Adhikari said.

As per MoF, local units should present their estimation ofbudget to central government and MoF within mid-January from 2019. Similarlythey would have to present model of budget implementation to the MoF withinmid-October every year.

Likewise, the central government will provide the tentativesize of grants to the local units before they prepare the budget for nextfiscal.

As per the provision of constitution, central governmentcan provide four types of grants — conditional, fiscal equalisation, matchingand special — to the local units.

“Each local unit will get fiscal equalisation grantannually. However, not all 753 units may get the three other types of grants.So, MoF will clarify the mode of receiving grants by the local units,” Adhikarisaid.

According to former finance secretary Shanta Raj Subedi,nearly 60 per cent of the total budget is required for federal government forcommitted costs such as national defence, foreign affairs, judiciary, federaladministration, interest and debt serving, social security, among others.

“The central government will be under pressure for resourcemanagement, which is why a budget preparation guideline is being formulated forthe local units,” Subedi explained.